Churchill Downs to Restate Revenues

Chances are, not many people will be sipping mint juleps over this news.

Churchill Downs Inc., whose racetrack holdings include the venerable Louisville venue that hosts the Kentucky Derby, announced that it will amend its 10-K to reflect the reclassification of certain simulcast "host fee" expenses in its audited financial statements.

The revisions will have no impact on its gross profit, operating income, or net earnings for any period covered in the restatement, according to the company.

Churchill Downs explained that while preparing its filing for the first quarter of 2004, it discovered an inconsistency in how its operating units account for host fee expenses. While some racetracks netted these costs against revenues, it explained, others accounted for them as operating expenses.

Churchill Downs said the amended 10-K is being filed to conform the accounting practices. Host fee expenses will now be classified as operating expenses at all locations.

While earnings will not be impacted, the reclassification will increase revenues, as well as operating expenses, by about $21 million, $23 million, and $23 million for the years 2001, 2002, and 2003, respectively.

Said chief financial officer Michael Miller in a statement, "Even though our earnings are not impacted by this reclassification, we believe that using the same accounting treatment of the host fees across our racetracks is appropriate and more consistently reflects our revenues and operating expenses."